The Virgin America saga is an embarrassment to the USA

If the supposedly bright folks at the US Department of Transporation still cannot work out whether or not Virgin America is in accordance with US ownership rules then they’re in the wrong jobs. They should call in some expertise from Wall Street where there are a couple of thousand lawyers who could give them an answer in about 15 minutes (not that they would actually do it in 15 minutes I realise, time being money.)

Actually I don’t think the DOT is struggling much with the legal niceties – what they’re struggling with is finding the guts to stand up to incumbent carriers that have failed to create sustainable businesses over the past 60 years, in some cases have little hope of putting that right, and definitely don’t want any start-ups – American or otherwise – adding to their problems.

Bear in mind that this is not about a forensic legal investigation of shady offshore shareholdings in a grey area of the law – it’s about whether or not the great bulk of a nine-figure dollar investment is American money or not. I don’t believe that is hard for the DOT to puzzle out.

But if you look at the objections from the US carriers what you find is that they’re not really arguing about the cash. Their argument is about intellectual property – basically if a foreigner has any input into a US operation then that’s fair game. In fact American  is pretty much into mind-control: essentially according to them if the idea was thought-up by Richard Branson and his colleagues (which Virgin doesn’t dispute) then that alone counts as foreign control.

And poor old Continental, well-known for its lack of sophistication in financial matters, insists that it just finds the whole thing too puzzling to understand – so it can’t be allowed to happen.

It’s to America’s great shame that this nakedly protectionist nonsense is allowed to continue. Branson dreamed up Virgin America, US investors jumped onto the opportunity in a big way, and skilled American air transport professionals queued up to join it. All its benefits flow to the US economy. I don’t think there is any respectable reason for the DOT to deny Virgin America operating authority – but if they think there is then they should spell it out immediately.

And it’s not just me that thinks this situation is wrong.

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